The Daily Trade – Day 46

Filed under: Learn Forex Trading |

Trade Number 46 – GBP/AUD 1-Hour Chart

I have yet another Daily Trade for you today, and today, the trading example comes from the GBP/AUD chart, which is another of the lesser popular forex pairs.

 

Take a look at Figure 1. and you will see a support/resistance zone (the one in the middle of the chart) that I have drawn in that has been respected on at least four separate occasions. This is the area where I have been looking out for any price action signals on the daily, 4-hour, and 1-hour charts (By the way, just ignore the dotted lines as these are from another trade that I took on the four hour chart).

 

If you now take a look at Figure 2., which is the 1-hour chart for this pair, you will see that price did indeed make it back up to this area. There were two good entries that you could have gotten in on, which are both bearish engulfing patterns. If you’d gotten in on the first one, I would have gone for a risk-reward of 1:2, as the stop would have been quite wide at the high of the move. However, if you’d missed that one and got in on the second bearish engulfing pattern, then you could have perhaps gone for a risk-reward of 1:3.

 

Figure 3.

If you now look at Figure 3., you will see that both of these trades would have been favorable to us. This is yet another good example of price action trading at key areas of support and resistance. It is a simple method, but one that works time and again. I will be back with another trading example tomorrow. See you then.

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